JBS S.A., based in Brazil Has offered to buy the proportion of equity in Pilgrim’s Pride Corporation (PPC) that it does not own. The holding Company controls 80.5 percent of the equity with 17 percent held by institutions and the remainder by individual investors. The offer of $26.50 per share in cash represents a premium of 17 percent over the closing price of $22.68 on Thursday, August 12th.
Pilgrim’s Pride has a market capitalization of $6.67 million with total assets of $7,755 million and carries $2,270 million in long term debt.
Pilgrim’s Pride Corp. has traded over a 52 week period in the range of $14.06 to $27.78 with a 50-week moving average of $21.97. On a 12-month trailing basis, operating margin was 4.9 percent but profit margin was a negative 0.25 percent. The company has returned 5.4 percent on assets but with a negative return on equity of 1.3 percent.
The offer will be subject to the approval by a special committee of the board of Pilgrim’s Pride. Given the overwhelming vote of the parent company, the transaction is inevitable.
The move to acquire all the equity of Pilgrim’s Pride is part of a strategy by JBS S.A. to consolidate protein operations in the U.S. in advance of an IPO. This action was previously proposed in 2019 but delayed by legal events in Brazil concerning the major shareholders of the holding company. Subsequently in 2020 the advent of COVID obviously sidetracked the IPO.